Wakilii

KCB Bank (U) Ltd v Formula Feeds Ltd and 3 Others (Civil Application 38 of 2020)

Supreme Court · [2021] UGSC 47 · 2021 Application Granted AI-generated summary ↓ Download Pin to watchlist Add to matter
Jurisdiction
Uganda
Case Type
Application in the Supreme Court for further security for costs and security for payment of past costs in a pending civil appeal.
Decision
Application allowed; respondents ordered to deposit Shs 100,000,000 as further security for costs and Shs 200,000,000 as security for past costs within 45 days, failing which Civil Appeal No. 13 of 2020 stands dismissed.

Observed later treatment

Cited — treatment unverified cited in 3 (treatment unverified) Sequitur — Uganda’s citator · Derived from citing cases in the Wakilii corpus — not an assertion that this case is good law.

Citator coverage is limited to judgments in the Wakilii corpus and source-matched treatment records. Absence of a signal is not an assertion that the case remains good law.

No adverse treatment recorded Cited 3 times with no adverse treatment recorded; not yet tested on the merits. Citations rising — 3 citing cases on record, 3 in the most recent three data years. Derived from citing cases in the Wakilii corpus — a deterministic signal, not legal advice.

AI-generated summary. This summary was generated by AI from the full text of the judgment. It may contain errors or omissions—always read the source judgment before relying on it.

Holding

On the bank's application for further security for costs and security for past costs under Rule 101(3) of the Supreme Court Rules, the Court held the burden lay on the applicant to show sufficient cause. Overruling the respondents' preliminary objection that the application was premature and a disguised alternative to execution, the Court found the respondents — Kenyan nationals with no proven attachable assets in Uganda, substantial unpaid costs and an outstanding consent judgment, and an appeal with poor prospects of success — should furnish security. They were ordered to deposit Shs 100,000,000 as further security and Shs 200,000,000 for past costs within 45 days, failing which the appeal would stand dismissed.

Outcome

Application allowed; respondents ordered to deposit Shs 100,000,000 as further security for costs and Shs 200,000,000 as security for past costs within 45 days, failing which Civil Appeal No. 13 of 2020 stands dismissed.

Facts

In 2011 the respondents, Kenyan nationals doing business in Uganda, obtained credit facilities of about Shs 4,531,000,000 from the applicant bank, secured by a mortgage over mailo land registered in their names. They defaulted and sued the bank (High Court Civil Suit No. 289 of 2014), challenging the securities on the basis that, as foreigners, they could not own mailo land. In the proceedings they admitted indebtedness of Shs 2,159,000,000, for which a consent judgment was entered. The High Court nullified the mortgages as illegal and entered judgment against the respondents for Shs 4,272,740,118 with 21% interest and costs (taxed at Shs 71,726,801, of which Shs 30,000,000 was paid). The Court of Appeal dismissed their appeal with costs (taxed at Shs 695,650,700, later set aside as ex-parte). The respondents appealed to the Supreme Court (Civil Appeal No. 13 of 2020). The bank then applied for further security for costs and past costs, contending the statutory Shs 400,000 deposit was inadequate and the respondents had no attachable assets in Uganda.

Issues

  1. Whether the application for further security for costs and security for past costs was premature, misconceived, or an abuse of process amounting to a disguised alternative to execution.
  2. Whether the applicant satisfied the conditions for the grant of an order for further security for costs and security for payment of past costs under Rule 101(3) of the Supreme Court Rules.

Orders

  • The preliminary objection is overruled.
  • The respondents shall deposit Shs 100,000,000 as further security for costs.
  • The respondents shall deposit Shs 200,000,000 as security for payment of past costs.
  • The said sums shall be deposited within 45 days from the order.
  • Civil Appeal No. 13 of 2020 shall stand dismissed if the respondents fail to comply.
  • Costs of the application awarded to the applicant.

Rules and key headnotes

Civil Procedure — Security for Costs — Burden on the applicant
The burden lies on the applicant for an order of further security for costs to show sufficient cause why the relief should be granted; merely averring that the security already deposited is inadequate, or that costs ordered below remain unpaid, does not impose an obligation on the court to grant the application.
Civil Procedure — Security for Costs — Court's discretion under Rule 101(3)
Rule 101(3) of the Supreme Court Rules confers unfettered jurisdiction to order further security for costs and security for past costs at any time in appropriate cases, but the discretion must be exercised reasonably and judicially, having regard to the circumstances of each case and balancing the parties' rights.
Civil Procedure — Security for Costs — Relevant considerations
In exercising its discretion to order security for costs the court considers, among other factors, the absence of known assets or address within the jurisdiction, insolvency or inability to pay costs, the financial standing of the appellant, unpaid substantial costs already incurred, the bona fides of the claim, the prospects of success of the appeal, and the conduct of the respondent.
Civil Procedure — Security for Costs — Prospects of success of the appeal
A demonstrable lack of reasonable chance of success of an appeal is sufficient cause for the court to order an appellant to furnish not only further security for costs of the appeal but also past costs; inability to pay per se is not the only ground for ordering security.
Civil Procedure — Security for Costs — Foreign litigant and enforcement abroad
Where a litigant is a foreign national without proven attachable assets within the jurisdiction, security for costs may be ordered notwithstanding reciprocal enforcement arrangements between the states, since execution abroad may still be difficult and costly to the successful party.
Company Law — Security for Costs — Limited liability company as plaintiff
Section 284 of the Companies Act reinforces the court's discretion to require sufficient security for costs where a limited liability company is plaintiff and credible testimony shows reason to believe the company will be unable to pay the defendant's costs if the defence succeeds.
Civil Procedure — Security for Costs — Prematurity and alternative to execution
An application for further security for costs and past costs is not premature or a disguised alternative to execution merely because the past costs remain unpaid or are under challenge; where it relates to taxed costs in the courts below, each application is determined on its own peculiar facts.

Legislation cited (6)

Cases cited (6)

  • Noble Builders (U) Ltd v Jabal Singh Sandhu (Civil Application No. 15 of 2002)
  • Goodman Agencies Ltd v Hasa Agencies (K) Ltd (Civil Reference No. 1 of 2011)
  • Kakooza Jonathan v Kasaala Cooperative Society Ltd (Civil Application No. 13 of 2011)
  • Bank of Uganda v Joseph Nsereko (Civil Application No. 7 of 2002)
  • Deepak K. Shah v Manurama Ltd (HCMA No. 361 of 2001)
  • G.M. Combined (U) Ltd -Vs- A.K. Detergents (U) Ltd

Cases citing this judgment (3)

How later Ugandan judgments in the Wakilii corpus have cited this case. Treatment labels come from Sequitur — Uganda’s citator — each backed by a verbatim span from the citing judgment, and are not an assertion that this case is, or is not, good law.

Full judgment

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KCB Bank (U) Ltd v Formula Feeds Ltd and 3 Others (Civil Application 38 of 2020) [2021] UGSC 47 (14 September 2021)
Source: this page presents Wakilii’s issue analysis and metadata for a publicly reported Ugandan judgment. Any AI-generated summary is marked as such. Judgment text is sourced from the Uganda Legal Information Institute (ulii.org). Wakilii is not affiliated with ULII.